Bull Radar

Style Outperformer:

• Large-Cap Value -.4%

Sector Outperformers:

• 1) Coal +2.2% 2) Oil Service +1.5% 3) Banks +.9%

Stocks Rising on Unusual Volume:

• WGP, SCSS, SHLM, STZ, WATT, HSBC, TPX, STRL, AYI, C, FFIN, FDS, AVAV, JPM, LULU, ATI, OKS, TRVG, VAR, WFC, CLR, WBC, WAL, CRZO and RF

Stocks With Unusual Call Option Activity:

• 1) NFX 2) KND 3) SPLS 4) ITB 5) ADSK

Stocks With Most Positive News Mentions:

• 1) GRPN 2) BAC 3) AYI 4) ANF 5) FITB

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running +16.3% Above 100-Day Average
• 2 Sectors Rising, 8 Sectors Declining
• 25.1% of Issues Advancing, 72.8% Declining
• 62 New 52-Week Highs, 21 New Lows
• 48.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 38.04%
• Vix 11.82 +17.75%
• Total Put/Call .80 -14.89%
• TRIN/Arms .49 -32.6%

Thursday Watch

Evening Headlines

Bloomberg:

• AI Will Add $15.7 Trillion to the Global Economy. Artificial intelligence may not be so threatening after all. Amid warnings of the economic disruption that robots and automation could unleash on the world economy as traditional roles disappear, researchers are finding that new technologies will help fuel global growth as productivity and consumption soar. AI will contribute as much as $15.7 trillion to the world economy by 2030, according to a PwC report Wednesday. That’s more than the current combined output of China and India.

• Japan Retail Growth Slows as Wages Continue to Disappoint. Japan’s retail sales growth slowed in May compared to last year, signaling that consumers are still reluctant to open their wallets. 

• Equity Rally Extends to Asia as Higher Rates Seen. Stocks in Asia look set to join a rally in U.S. equities as investors bet the global economy can withstand tighter financial conditions as growth picks up. American financial shares climbed on capital return plans. Equity-index futures in Japan, Australia and Hong Kong all advanced after the S&P 500 Index rebounded from the biggest selloff in six weeks, with technology shares snapping back. Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. all climbed in after-hours trading after lifting dividends and buying back shares. The pound held onto its gain triggered by Bank of England chief Mark Carney’s comments that rates may need to rise soon. The loonie had also climbed as Canada’s Stephen Poloz reiterated he’s considering tighter policy. Futures on Japan’s Nikkei 225 Stock Average gained 0.3 percent in Chicago trading. Contracts on Australia’s S&P/ASX 200 Index rose 0.7 percent and futures on Hong Kong’s Hang Seng Index climbed 0.6 percent.

• Banks Unleash Surprisingly Big Payouts After Fed’s Stress Tests. (video) The Federal Reserve told big banks they have more than enough capital, and they promptly announced a windfall for their shareholders. JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp. led U.S. firms in unveiling plans to boost dividends and stock buybacks more than analysts had projected, after every lender passed annual stress tests for the first time since the Fed began the reviews in the wake of the 2008 financial crisis. Shares across the industry rallied in late trading. Still, Capital One Financial Corp. slipped more than 2 percent after it was the lone bank to stumble through the exam Wednesday, garnering conditional approval to make payouts while it fixes “material weaknesses” in planning.

Wall Street Journal:

• Anthem Pulling Back on Offering ACA Plans in Nevada. The state’s health insurance exchange says insurers will be offering plans in only three Nevada counties.

Fox News:

• High-tax Connecticut facing new budget mess.

MarketWatch:

• There may be fecal bacteria in your Starbucks(SBUX) iced coffee, investigation finds.

CNBC:

• Citi(C) doubles dividend, bank shares jump after industry passes Fed stress tests. (video)

• Google(GOOGL) has just built a prototype for virtual-reality ads on mobile devices.

• Big bank cash returns just beginning, experts say. (video)

• Why Janet Yellen is very wrong about the banks.

• Alibaba(BABA) to invest $1 billion into Lazada as Southeast Asia awaits Amazon.

Zero Hedge:

• FBI Director McCabe Subject Of Three Separate Federal Inquiries Into Alleged Misconduct: Report.

• Lacy Hunt: The Fed Has Undermined The Economy's Ability To Grow.

• Blue Apron Prices IPO At Bottom Of Deeply Discounted Range.

• Banks Rush To Announce Dividend, Buyback Plans After All Pass Fed's Stress Test, COF Needs To Resubmit Plan.

• Moody's Warns That Private-Label Credit Card Issuers Will Be Crushed By Retail Implosion.

• The Power Grid Is Far More Vulnerable To Cyber Attacks Than Most People Realize.

• "How Did It Go So Wrong" Goldman Asks, As It Slashes Oil Price Target.

• Investors Just Panic-Dumped "Growth" Stocks As ETF Outflows Hit Record High.

• Dollar Dumped, Tech Stocks Pumped As Central Banker Bias Turns Tighter. (graph)

Business Insider: 

• Canada hit 2 critical warning signs for a financial crisis.

• This robot-made pizza in Silicon Valley should terrify Domino's(DPZ) and Pizza Hut.

Night Trading 

• Asian equity indices are +.25% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 85.50 -.5 basis point. 

• Asia Pacific Sovereign CDS Index 19.5 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 73.16 +.15%.

• S&P 500 futures +.21%.

• NASDAQ 100 futures +.17%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AYI)/2.03

• (CAG)/.37

• (STZ)/1.98

• (HAIN)/.40

• (MKC)/.76

• (RAD)/-.01

• (WBA)/1.30

• (MU)/1.51

• (NKE)/.50

Economic Releases 
8:30 am EST

• 1Q GDP is estimated to rise +1.2% versus a prior estimate of a +1.2% gain. 

• 1Q Personal Consumption is estimated to rise +.6% versus a prior estimate of a +.6% gain.

• 1Q GDP Price Index is estimated to rise +2.2% versus a prior estimate of a +2.2% gain.

• 1Q Core PCE is estimated to rise +2.1% versus a prior estimate of a +2.1% gain.

• Initial Jobless Claims for last week are estimated to fall to 240K versus 241K the prior week.

• Continuing Claims are estimated to fall to 1934K versus 1944K prior.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Bullard speaking, Japan Industrial Production report, German CPI report, weekly EIA Natural Gas Inventory repo and the weekly Bloomberg Consumer Comfort Index could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by technology and financial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.

Stocks Surging into Final Hour on Less Hawkish Central Bank Commentary, Oil Gain, Technical Buying, Biotech/Transport Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 9.99 -9.67%

• Euro/Yen Carry Return Index 133.29 +.37%

• Emerging Markets Currency Volatility(VXY) 7.61 +1.87%

• S&P 500 Implied Correlation 33.19 -3.35%

• ISE Sentiment Index 76.0 -7.32%
  

• Total Put/Call .95 +21.79%

• NYSE Arms .64 -31.96%

Credit Investor Angst:

• North American Investment Grade CDS Index 60.0 -1.48%
  

• America Energy Sector High-Yield CDS Index 476.0 +.62%

• European Financial Sector CDS Index 52.77 +.23%

• Western Europe Sovereign Debt CDS Index 6.39 +6.15%

• Asia Pacific Sovereign Debt CDS Index 19.53 +1.75%

• Emerging Market CDS Index 198.04 -1.01%
  

• iBoxx Offshore RMB China Corporate High Yield Index 139.57 unch.

• 2-Year Swap Spread 21.75 +1.75 basis points

• TED Spread 29.5 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -29.0 +.75 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.05 +.26%
• 3-Month T-Bill Yield 1.0% unch.
  

• Yield Curve 87.0 +4.0 basis points

• China Import Iron Ore Spot $62.33/Metric Tonne +4.41%

• Citi US Economic Surprise Index -76.40 +1.1 points

• Citi Eurozone Economic Surprise Index 11.20 +2.0 points

• Citi Emerging Markets Economic Surprise Index 10.40 unch.

• 10-Year TIPS Spread 1.75 +3.0 basis points
  
• 27.8% chance of Fed rate hike at Sept. 20 meeting, 29.3% chance at Nov. 1 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +125 open in Japan 
• China A50 Futures: Indicating -67 open in China

• DAX Futures: Indicating +12 open in Germany

Portfolio: 

• Higher: On gains in my tech/medical/biotech/retail sector longs 

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my (EEM) short

• Market Exposure: Moved to 100% Net Long

Today's Headlines

Bloomberg:

• Draghi Tried to Be Cautious But Spooked the Market Anyway. (video) Mario Draghi just got evidence that his call for “prudence” in withdrawing European Central Bank stimulus applies to his words too. The euro and bond yields surged on Tuesday after the ECB president said the reflation of the euro-area economy creates room to pull back unconventional measures without tightening the stance. Policy makers noted the jolt that showed how hypersensitive investors are to statements that can be read as even mildly hawkish, according to three Eurosystem officials familiar with their thinking.

• Trump Accepts Macron's Invitation to Attend Bastille Day Parade. (video)

• China Examines Deals Gone Awry to Gauge Banking Risks. China’s banking regulator, which has asked local lenders to provide loan information on the country’s top deal-making companies, is examining examples of acquisitions gone awry by those firms to assess potential risks to the financial sector, people familiar with the matter said. The China Banking Regulatory Commission is seeking to gauge how much risk Chinese banks face by lending funds to Anbang Insurance Group Co., Dalian Wanda Group Co., Fosun International Ltd., HNA Group Co., and the Chinese buyer of the AC Milan soccer club, the people said, asking not to be identified because the matter is private. Specifically, the regulator is seeking to assess the likelihood of litigation costs, potential losses to banks if the deals sour and whether enough due diligence was conducted, the people said.

• China Plans Coal Import Ban at Some Ports Starting July 1.

• Europe Stocks Little Changed as Comments on Draghi Give Support. (video) European stocks ended the session little changed, erasing an earlier drop after comments by Eurosystem officials damped speculation Mario Draghi had turned more hawkish. The Stoxx Europe 600 Index closed at 385.82, reversing a decline of as much as 1 percent. The officials said the European Central Bank president’s speech on Tuesday was intended to strike a balance between recognizing the currency bloc’s economic strength and warning that monetary support is still needed.

• Suddenly the U.S. Is Exporting More Crude Than a Bunch of OPEC Members. Move over, Equatorial Guinea. Slide aside, Gabon. Make room, Ecuador. There's a new major oil exporter on the world stage, and it's the United States of America.

• Your Evening Briefing.

• The Future According to Elon Musk.

• Bond Market's Newest Bet: Buy America, Sell Canada on Rate Hikes.

• Some Central Banks Are Exploring the Use of Cryptocurrencies.

Wall Street Journal:

• ObamaCare’s Victims Need Relief Now. More than 1,000 counties have only a single insurer. Doug Lake lives in one—and rates are going up 43%.

• Macron Outlines Plans to Overhaul France’s Labor Laws. The French leader says changes to employment regulations are needed to reinvigorate the country’s economy.

• Blue Apron, Struggling to Woo Investors, Lowers Price Range for IPO. The food-delivery startup now expects to offer shares in the range of $10 to $11 apiece.

Fox News:

• Susan Rice suggests race, gender bias linked to 'unmasking' backlash. (video)

CNBC:

• Technology is the hidden driver of low inflation: BlackRock’s Rieder. (video)

• Apple(AAPL) Glasses will be bigger than the iPhone, analyst Gene Munster says.

• FedEx(FDX) warns of possible 'material impact' after subsidiary hit by cyberattack. (video)

• Stress tests could mark bottom for bank stocks.

Zero Hedge:

• Project Veritas Exposes CNN's Van Jones: "The Russia Thing Is Just A Big Nothing Burger".

• It Begins: WalMart(WMT) Warns Truckers It Will No Longer Work With Them If They Move Goods For Amazon(AMZN).

• Ethereum Soars 30%, Tops $300 After WEF Blockchain Report.

• WTI/RBOB Jump On Gaosline Draw As US Crude Production Tumbles Most Since August. (graph)

• Pending Home Sales Tumble, Unchanged Since June 2013. (graph)

• New Device Allows Cops To Download All Of Your Smartphone Activity In Seconds.

• Cable, Gilt Yields Spike After BoE's Carney Hints At Stimulus Withdrawal. (graph)

• EURUSD, Bund Yields Plunge After ECB Tells Market 'You Misjudged Draghi's Comments'.

• Wholesale Inventories Bounce In May But Remain Drag On Q2 GDP. (graph)

Bear Radar

Style Underperformer:

• Large-Cap Value +1.0%

Sector Underperformers:

• 1) Utilities -.3% 2) Drugs unch. 3) REITs unch.

Stocks Falling on Unusual Volume: 

• GOV, OMER, AI and ALDR

Stocks With Unusual Put Option Activity:

• 1) SEAS 2) BSX 3) ABT 4) Z 5) JCP

Stocks With Most Negative News Mentions:

• 1) ALDR 2) HRB 3) AAP 4) FMCC 5) MRK

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume